Heritage launches consultation on digital platform revenue sharing for news sector

Canadian Heritage is seeking input on how best to compensate the news sector after a preliminary study showed there was consensus among stakeholders that government intervention was needed, but no popular approach on how to deal with declining advertising revenues in the industry. Tuesday, Heritage Minister Steven Guilbeault launched a consultation, along with a discussion document highlighting ideas and perspectives for fair revenue sharing between digital platforms and news media. The government’s preliminary questionnaire asked experts and stakeholders if they preferred a mandatory code and arbitration regime -- which “would dictate the rules for negotiations between digital platforms and news outlets to ensure news outlets are fairly compensated for their work” -- or if they preferred mandatory financial contributions from platforms, from a percentage of their overall Canadian revenues, distributed by an independent fund. “Platforms act as intermediaries and gatekeepers to the information available to Canadians. They aggregate, package and offer news to Canadians in ways that are efficient and innovative, and derive significant financial benefit from their operations in Canada,.” “Some also operate other critical digital business segments, such as the ad tech that supports the digital advertising market.” It noted that around one-third of journalism jobs have disappeared since 2010 in Canada, that 80 per cent of online advertising revenue goes to only a small number of platforms, and that COVID-19 has “amplified” the decline in advertising for news media businesses. The government, in its document, acknowledged that both digital platforms and news outlets directly benefit from each other while pointing out that voluntary negotiation agreements between the two sectors are already underway as well as partnerships to fund journalism initiatives. “However, in the absence of regulatory oversight, it is difficult to determine whether agreements made on a voluntary basis meet the goals of a sustainable, fair and diverse news and information ecosystem for Canadians and the full protection of an independent, free press,” it wrote in the consultation document. It said while most respondents agreed that intervention was needed, there was no majority support for either proposed solution. The code of conduct and arbitration model was welcomed by some respondents, according to the discussion paper, because it levels the playing field and negotiating power between online web giants and news outlets. However, concern was raised by other respondents that it would only help to further establish large news companies while leaving out smaller outlets, or that digital platforms would rescind their services in Canada, just like Facebook recently did in Australia. Respondents who preferred the mandatory financial contribution and independent fund model, according to the paper, argued that it would ensure “would treat all organizations fairly based on their size, that the funding may be easier to access for smaller news outlets or underrepresented groups, and that it may improve the funding of news outlets.” The government said the financial contribution would “be similar to how TV distributors in Canada are required to contribute to Canadian content within the broadcasting regulatory framework.” Participants further suggested that there be a transparent decision making process, that an explicit portion of funding should be earmarked for BIPOC-owned news organizations, and that it cannot be used for executive compensation. Those who opposed the model said it does not address the imbalance of market power, nor provide outlets with the regulatory tools, “such as algorithm change notifications or data sharing, necessary to improve their negotiating power”, and the fund could become politicized. “Elements of the two approaches could be combined in a model that aims to address a broader range of policy concerns while mitigating their respective risks,” the government wrote in its paper. This latest consultation is part of a package of government efforts to modernize its telecoms and internet policies: an update the Broadcasting Act, the development of a legal framework for online harms, news media remuneration, and copyright reform. Meanwhile, the Senate is working on its own private members bill, S-225, introduced in February by Senator Claude Carignan. If passed, the bill would amend the Copyright Act to allow for Canadian copyright owners to be paid for their journalistic works that are reproduced or published by digital platforms. — Reporting by Jenna Cocullo at jcocullo@thewirereport.ca and editing by Michael Lee-Murphy at mleemurphy@thewirereport.ca

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